Sky hit by gambling restrictions as ad revenue falls 14%

Broadcaster reported ad revenue of $446m in Q3.

Game of Thrones: Sky Atlantic show
Game of Thrones: Sky Atlantic show

Sky has been hit by gambling advertising restrictions as it reports a 14% year-on-year drop in ad revenue in the three months to 30 September.

The broadcaster reported ad revenue of $446m (£347m) and attributed the fall to the ban on gambling ads around sports before 9pm – something that came into effect on 1 August.

Sky also noted a weaker ad market as a reason for the decrease.

Group chief executive Jeremy Darroch told investors that Sky is "disproportionately" affected by the gambling legislations because of the high number of sports it broadcasts.

In the earnings call he said: "On ad revenue, I'd say broadly about one-third of it is market – TV market. Advertising markets in Europe, as you know, are pretty much all under pressure with mid-single-digit – perhaps a little bit more – declines year on year.

"And probably the balance of it is really down to gaming legislation change here, which is specific to the UK and Italy; [it] hasn't arrived in Germany. We're probably disproportionately affected by that, of course, because we've got such a strong sports business and [we are] the sports leader in Europe. That will work its way through over the course of this year."

Sky also reported a loss of 99,000 customers in the third quarter after "record streaming growth" in the previous three months because of the popularity of the finals series of Game of Thrones and the debut of Chernobyl.

However, for the year so far, Sky added 317,000 customers and forecasts returning to growth in this area in the final quarter. Sky's total subscriber base is 23.9 million.

Overall, third-quarter revenue increased 0.9% to $4.6bn, which Sky attributed to growth in direct-to-consumer and content revenue, which rose 1.9% ($3.8bn) and 15% ($315m) respectively.

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